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Pro traders buy the dip as bears push Bitcoin price to the edge of $30K

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In the last 24-hours Bitcoin (BTC) price dropped 14% and tested the $32,000 support for the fifth time this year. Traders probably became even more worried as the price fell to $31,050 but at the time of writing the 4-hour chart suggests that the selling could be slowing down. 

Currently the shorter-term charts indicate that Bitcoin is still flirting with bearish territory but a number of derivatives indicators and the top traders flow reflect neutral to bullish levels.

The last three times Bitcoin price fell below $32,000, an extensive rally of up to 30% followed. Data shows that the top traders at OKEx have been heavily buying the dip and the futures premium has held in an optimistic range.

BTC/USD 4-hour chart. Source: TradingView

Even though traders are buying this current dip, the sharp $4,200 drop did inflict serious damage on some investors. The move down to $31,270 was followed by $460 million in liquidations at derivatives exchanges. Interestingly, this occurred just as the open interest on BTC futures reached a $13.1 billion all-time high.

Derivatives exchanges BTC futures open interest in USD. Source: Bybt.com

Today’s price action might seem worrisome, but it pales in comparison to the Jan.10 24% crash that wiped out $1.5 billion in long contracts.

Veteran traders are more accustomed to Bitcoin’s 120% annualized volatility so a 12% price swing isn’t particularly frightening. In fact, top traders and arbitrage deks remained relatively calm during the dip.

To understand whether or not Bitcoin is flashing bearish signals, traders can analyze top traders’ long-to-short ratio at crypto exchages, the futures premium, and the options skew.

OKEx longs are 2.5 times larger than shorts

Exchange-provided data highlights traders’ long-to-short net positioning. By analyzing every client’s position on the spot, perpetual and futures contracts, one can obtain a clearer view of whether professional traders are leaning bullish or bearish.

With this said, there are occasional discrepancies in the methodologies between different exchanges, so viewers should monitor changes instead of absolute figures.

Top traders BTC long/short ratio. Source: Bybt.com

OKEx top traders have been adding long positions since Jan. 19, driving the indicator from 0.96 (slightly net short) to a 2.49 ratio which favors longs. This is the highest level in 30 days and indicates an unusually extreme imbalance.

On the other hand, top traders at Huobi averaged a 0.91 long-to-short ratio over the last 30 days, favoring net shorts by 9%. On Jan. 20, they added net short positions down to a 0.86 ratio but repurchased them as BTC plunged during the early hours of Jan. 21. Thus, they are back to their monthly average of 0.91 long-to-short.

Lastly, Binance top traders averaged a 21% position that favored longs over the past 30 days. These traders seem to be getting liquidated as their net longs were cut to 1.02 from 1.18 since late Jan. 20. According to data from Coinalyze, 40% of total BTC long liquidations over the past 24 hours took place at Binance.

The futures premium spiked

Professional traders tend to dominate longer-term futures contracts with set expiry dates. By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.

The 3-month futures should usually trade with a 6% to 20% annualized premium (basis) versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as backwardation and indicates that the market is turning bearish.

On the other hand, a sustainable basis above 20% signals excessive leverage from buyers, creating the potential for massive liquidations and eventual market crashes.

March 2021 BTC futures premium. Source: NYDIG Digital Assets Data

The above chart shows that the indicator ranged from 3.5% to 5.5% since Dec. 13, translating to a moderately bullish 19% annualized basis. Meanwhile, the recent 6.5% peak is equal to a 29% annualized premium, indicating excessive buyers leverage.

Although this is not the exact reason for today’s correction, market makers and arbitrage desks know precisely how to play this situation. Pushing the price down would certainly trigger a vast amount of liquidations and it should also be noted that the futures open interest had just reached an all-time high.

Currently, the BTC March contracts premium has stabilized near 2.5%, equivalent to a healthy 14% annualized basis.

20% crashes are the norm rather than the exception

It’s important to consider that Bitcoin holds a 60 day volatility of 4.2%. Therefore, these large corrections should be expected.

Bitcoin faced a 20% crash and tested sub-$28,000 levels on Jan. 4, and this was followed by a 27% intraday decline on Jan. 11. For those brave enough to buy each of these dips, a recovery of up to 30% followed less than four days later.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Source: https://cointelegraph.com/news/pro-traders-buy-the-dip-as-bears-push-bitcoin-price-to-the-edge-of-30k

Blockchain

Former London Stock Exchange Group CEO Urges UK Government to Explore Cryptocurrencies

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The former CEO of the London Stock Exchange Group, Xavier Rolet, has advised the UK government to look into cryptocurrencies and SPACs to minimize the adverse impact of Brexit. In a recent report, Rolet claimed that the UK has trailed behind other countries in both aspects.

The UK Should Turn To Crypto And SPACs?

Born in France, Rolet is a businessman and the Chief Executive Officer of the London-based credit-focused asset management firm CQS. Before assuming this position, though, he served as the CEO of the London Stock Exchange Group and was named as one of the 100 best CEOs in the world in 2017 by the Harvard Business Review.

In a report cited by Bloomberg, Rolet touched upon the potential consequences to the UK economy following the withdrawal from the European Union and the European Atomic Energy Community, better known as Brexit.

The executive believes that the UK has two viable options to consider if it wants to minimize the risks and help the nation flourish.

In the first one, he urged the government to “promptly consider the SPAC revolution.” Also referred to as “blank check companies,” these special purpose acquisition companies (SPAC) operate as shell corporations listed on a stock exchange with the idea of buying out a private company, thus making it public. Ultimately, this strategy eliminates the need to go through a traditional initial public offering (IPO).

While the US has seen significant adoption in the past year with a 10x increase in the raised funds compared to 2019’s results, the UK regulators have halted their progress on the London markets.

Rolet’s second advice involved digital assets as he noted that “all relevant UK government agencies should be resourced to thoroughly understand cryptocurrencies.”

With proper regulations, the crypto ecosystem could “place London and the UK at the center of a reputable and safe financial market.”

The UK’s Regulatory Approach To Cryptocurrencies

While UK’s regulators have hindered SPACs’ progress within the country, the nation’s financial watchdog, the FCA, has also been rather harsh against the cryptocurrency industry.

As of the start of this year, the Financial Conduct Authority banned crypto derivatives and exchange-traded notes (ETNs) to retail customers.

Additionally, the watchdog has issued several warnings to investors that they could lose all their funds if allocated in digital assets.

The regulator also announced that all UK-based digital asset businesses need to be registered with it but extended the deadline for applications to July 9th, 2021.

Featured Image Courtesy of TheGuardian

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Source: https://cryptopotato.com/former-london-stock-exchange-group-ceo-urges-uk-government-to-explore-cryptocurrencies/

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Blockchain

Traders remain bullish even as DeFi’s TVL falls to $54.4 billion

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Decentralized finance and the numerous platforms offering investment services have been the talk of the cryptocurrency sector for several months and this has resulted in investors capturing spectacular gains for some of the top DeFi tokens like Uniswap (UNI) and AAVE. 

The fast-moving prices and 1,000% APY on staked tokens elicited cheers from investors when the market was going up, but the recent selling pressure seen as Bitcoin price dropped below $45,000 shows that the highest fliers are often the quickest to fall as traders rush to exit their positions and lock in their gains.

Daily cryptocurrency market performance. Source: Coin360

On Feb. 22 Bitcoin (BTC) price entered a sharp corrective phase which saw the top digital asset pullback by more than 20% from its all-time high of $58,274. As this occurred, the majority altcoins also saw double-digit corrections and DeFi tokens like PancakeSwap (CAKE) fell as much as 55%. 

Total value locked in DeFi shows resilience

The total value locked in DeFi platforms also took a hit as Bitcoin and altcoins corrected. Data from DeFi Llama shows the combined TVL of all DeFi platforms fell from $64.89 billion to $54.22 billion on Feb. 24. Cointelegraph also reported that this week’s correction led to the second-largest day of DeFi loan liquidations in history. 

Total value locked in DeFi. Source: Defi Llama

The decline in TVL is a result of decreasing token values rather than protocol outflows, indicating that token holders remain committed to the continued expansion of decentralized finance and that the current yields are still incentivizing investors to rem engaged.

Market analysis indicates that despite the recent $5.8 billion Bitcoin and altcoin liquidation, bulls remain optimistic and see this price pullback as a sign of a healthy market.

The same goes for the DeFi sector, which has been in a strong uptrend since the start of the year. Increasing DEX volume as well as a rising TVL show that DeFi is still in the early stages of growth, and while pullbacks are to be expected, the overall trend is positive as institutional and retail investors increasingly gain exposure to this emerging asset class.

Source: https://cointelegraph.com/news/traders-remain-bullish-even-as-defi-s-tvl-falls-to-54-4-billion

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ZelaaPayAE deploys Pundi X’s merchant crypto payment solutions for UAE

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ZelaaPayAE (ZPAE), a Dubai-based blockchain payment network focused on the Gulf region, has announced the deployment of 100 XPOS Handy (point-of-sale terminals) and 10,000 XPASS cards from partner Pundi X, a cryptocurrency payment platform.

“Pundi X has the technology to empower merchants across the world to deploy easy-to-use blockchain solutions. We’re excited to bring it to the UAE market.”
– Sahil Arora, ZPAE CEO

XPOS devices enable cryptocurrency transactions on the blockchain from anywhere….from trendy cafes in Seoul, South Korea, to pubs in New Hampshire, USA. Similarly, the XPASS card makes it easy for customers to pay with their crypto-assets.

“Any corner of the world where XPOS is, that’s a place where seamless transactions can take place. Both ZPAE and Pundi X essentially want the same things; making the blockchain accessible.”
– Zac Cheah, Pundi X’s CEO and Co-Founder

ZelaaPayAE (ZPAE) was founded with the aim of unlocking the power of cryptocurrency in the Middle East. The ZPAE token trades on numerous exchanges such as CoinTiger, JustSwap, Bilaxy, and others. The company is engaged in introducing a number of decentralized finance products in the UAE.

Source: Pundi X

Source: https://www.cryptoninjas.net/2021/02/24/zelaapayae-deploys-pundi-xs-merchant-crypto-payment-solutions-for-uae/

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